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A meaningful precaution sponsors can take to prevent security breaches is participant education. Cybersecurity defense relies on everyone and educating plan participants about common scams and digital attacks prevents data leaks. Updates on the latest cybercriminal attack methods as a part of ongoing participant education can help ensure digital safety going forward. Additionally, plan sponsors should ensure that they work with record keepers that use technologies to secure participant accounts such as a two-factor authenticator application, requiring a photo ID upon login, or using advanced facial recognition software to flag suspicious login attempts.
Another precaution that could be taken is purchasing cybersecurity insurance. Plan sponsor considerations for this type of insurance include who is liable in the event of a breach, who is insured, how the plan will be purchased, and finally, what is covered.
Even with all of these precautions in place, it is still possible for a data breach to occur and plan sponsors need to have a plan established with their record keeper for cybersecurity attacks. When breaches occur, the first step for a plan sponsor is to work with IT to isolate compromised systems to make sure the entire database is not leaked. Once that happens, it’s important to determine what type of data was compromised. If customer private information is leaked, it’s important to prioritize the safety of their accounts. Increased surveillance of distributions in situations like these is key to ensuring that money is not being stolen. Finally, a communication plan should be crafted for customers who are affected in the event of a compromise.
By continuously updating security procedures and fostering a proactive approach to cybersecurity, plan sponsors can provide a strong defense against evolving threats. These efforts not only help prevent attacks but also establish confidence in plan participants regarding the protection of their digital assets. By staying prepared, the security of retirement funds can be effectively safeguarded, ensuring peace of mind for everyone involved.
Sources :
https://www.plansponsor.com/how-should-a-plan-sponsor-respond-to-a-data-breach/
https://www.bdo.com/insights/assurance/retirement-plans-cybersecurity-insights-for-plan-sponsors
Securities through LPL Financial, Member FINRA/SIPC. Investment advisory services offered through Global Retirement Partners, LLC (GRP), dba Advizrs, an SEC registered investment advisor. GRP and LPL Financial are separate non-affiliated entities.
This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.
The financial professionals associated with LPL Financial may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.
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